PH faces huge cement shortfall

June 20, 2017

The Philippines faces up to 37 million metric tons (mmt) of cement shortage by 2025 even if new capacities shall have been installed by then.

Data from the Board of Investments (BOI) show the shortage could range from 12 mmt to 37 mmt or an average of 25 mmt in seven years time based on a demand forecast of 47 mmt to 72 mmt by that year or an average of 59 mmt, on a high growth scenario.

That would be more than twice the 26 mmt cement consumption registered in 2016.

For the year, demand is seen going up to 28 mmt to 29.8 mmt or a deficit of 5.38 mmt to 6.68 mmt.

This would mean the country would have to import more cement this year.

Last year, the Philippines had to 1.59 mmt of cement to cover the shortfall from local sales which supplied only 24.37 mmt, data from the Cement Manufacturers of the Philippines show.

The Cement Market Report provided by BOI had different figures, which was 3.7 million for actual importation in 2016 and only 23.1 mmt in local production.

The Report prepared by the Cement Business Advisory Ltd and was quoted in the Eagle Cement Corp. prospectus shows as of December 2016, the cement industry had an estimated annual clinker and cement capacity of 20.6 and 28.63 million tons, respectively, based on nameplate capacities of the cement companies.

However, the Report indicated that the cement industry was only able to produce 16.8 million tons of clinker and 23.1 million tons of cement.

The Report also estimated that the Philippine cement industry would need an additional 11.55 million tons of cement capacity to address cement consumption requirements until 2025.

“It is to be noted that even with an additional capacity of 11.55 million tons of cement by 2025, there is still a deficit of 12.4 million tons of cement for a low-growth scenario which is equivalent to a 7 percent growth, 25 mmt for a medium growth scenario and 37 mmt for a high-growth scenario,” the BOI said.

The Report said additional capacity will only start to come in 2018 at 2.68 mmt which is not even enough to cover the projected deficit of 4.5 mmt to 7.4 mmt.

The deficit will be grow larger in the following years as additional capacity could not cover the additional demand. All told only 11.55 mmt of additional capacity will be able in the market beginning 2022.

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